You need to download and install Air Video Server.
Once the server is running, add folders that you want to share. If you have videos in your iTunes playlists, you can also share those playlists.
If you have been running Air Video Server before the window will not open. You can access it using
Air Video Server icon in menubar (on Windows the icon is in system tray).
In Air Video on your iPhone / iPod touch add your computer to server list.
After the server is added you can browse its folders.